By Haripriya Suresh and Sai Ishwarbharath B BENGALURU (Reuters) -Tata Consultancy Services, India’s top software-services exporter, beat second-quarter revenue estimates on Thursday, aided by strength in its banking, financial services and insurance segment, and said it expects better growth in the second half of the fiscal year. The results boosted optimism around the country’s $283 […]
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India’s TCS beats quarterly revenue estimates, sees better growth in H2
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By Haripriya Suresh and Sai Ishwarbharath B
BENGALURU (Reuters) -Tata Consultancy Services, India’s top software-services exporter, beat second-quarter revenue estimates on Thursday, aided by strength in its banking, financial services and insurance segment, and said it expects better growth in the second half of the fiscal year.
The results boosted optimism around the country’s $283 billion IT sector, which has been dealing with cautious client spending amid economic uncertainties, especially in North America, its largest market.
“If there are no more tariff-related surprises, Indian IT should slowly recover from this quarter,” Centrum Broking analyst Piyush Pandey told Reuters, noting that TCS’ revenue and operating margins were above expectations.
TCS CEO K Krithivasan told analysts that the number of projects getting deferred or paused has reduced compared to the preceding quarter.
“We have had better growth compared to Q1. Macros have not changed much, but our deep engagement with clients, AI solutions – all of this gives confidence that we will improve the growth momentum compared to the first half,” he said.
Sales in the September quarter rose 2.4% to 657.99 billion rupees ($7.4 billion), beating analysts’ average estimate of 650.86 billion rupees, according to data compiled by LSEG.
Revenue at its core banking, financial services and insurance segment, which accounts for about a third of the company’s business, rose 1%, while revenue from its consumer, healthcare and manufacturing verticals fell 2.9%, 2.2% and 1.1%, respectively.
Profit rose 1.4% to 120.75 billion rupees, but missed analysts’ average estimate of 126.29 billion rupees, hurt by 11.35 billion rupees in severance costs. In July, TCS announced its plans to shed 2% of its workforce in fiscal 2026, affecting about 12,200 middle and senior management jobs.
The company’s employee count fell by 19,755 sequentially, the steepest-ever decline in a quarter.
TCS’s total order bookings stood at $10 billion during the second quarter, versus $9.4 billion in the first quarter and $8.6 billion in the year-ago period, bringing some cheer to the sector that has been facing many challenges, including a proposed 25% tax on outsourcing payments and an H-1B visa crackdown that is expected to upend the industry’s playbook.
The company also said it would set up a new business entity to build AI infrastructure, including a 1 GW data centre in India, over a period of five to seven years.
“When functional, 1GW in capacity will make TCS among the Top-5 data center operators in India and will possibly entail capex of US $5bn,” analysts at Jefferies said.
($1 = 88.7910 Indian rupees)
(Reporting by Haripriya Suresh and Sai Ishwarbharath B; Editing by Sonia Cheema, Mrigank Dhaniwala, Dhanya Skariachan and Shinjini Ganguli)